The Westminster Foundation For Democracy Limited Company Number: 2693163 AN EXECUTIVE NON-DEPARTMENTAL PUBLIC BODY OF THE FOREIGN & COMMONWEALTH OFFICE ANNUAL REPORT AND ACCOUNTS For the year ended 31 March 2016

Presented to Parliament pursuant to Article 6 of the Government Resources and Accounts Act 2000 (Audit of Non-profit-making Companies Order 2009) Ordered by the House of Commons to be printed on 18 July 2016

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© Crown copyright 2016 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at www.gov.uk/government/publications Any enquiries regarding this publication should be sent to us at: Westminster Foundation for Democracy, Artillery House, 11-19 Artillery Row, London, SW1P 1RT Print ISBN 9781474130516 Web ISBN 9781474130523 ID P002799537 07/16

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The Westminster Foundation for Democracy Limited STATEMENT OF GOVERNORS‟ AND ACCOUNTING OFFICER‟S RESPONSIBILITIES

In accordance with Company Law and with the Memorandum and Articles of Association, the Governors of The Westminster Foundation for Democracy Limited are responsible for the administration and management of the affairs of WFD and are required to present audited financial statements for each financial year. The Governors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of WFD and enable them to ensure that the financial statements are prepared in accordance with the Companies Act 2006 and the Accounts Direction given by the Secretary of State for Foreign and Commonwealth Affairs and relevant International Financial Reporting Standards. In addition, within the terms and conditions of a Management Statement agreed between the Foreign and Commonwealth Office and the Governors of The Westminster Foundation for Democracy Limited, the Governors, through the Chief Executive, are required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of WFD and of the surplus or deficit and cash flows for that year. In preparing the financial statements, the Governors are required to comply with the requirements of the Government Financial Reporting Manual and in particular to ensure that: a. b. c. d.

appropriate accounting policies are selected and then applied consistently; judgements and estimates are made that are reasonable and prudent; applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; the financial statements are prepared on a going concern basis unless it is inappropriate to presume that WFD will continue its activities.

The Governors have taken reasonable steps to: a. b. c. d. e. f.

ensure that funds from the Foreign and Commonwealth Office are used only for the purposes for which they have been given and in accordance with the Management Statement; ensure that funds from the Department for International Development are used only for the purposes for which they have been given and in accordance with the relevant Accountable Grant; ensure that all other grants are used only for the purposes for which they have been given; ensure that there are sound financial systems and management controls in place to safeguard public funds; safeguard the assets of WFD and prevent and detect fraud; secure the economical, efficient and effective management of WFD‟s resources.

Sections 5.1, 5.2, and 5.3 of the Management Statement define the Permanent Under-Secretary for Foreign and Commonwealth Affairs as Principal Accounting Officer. The Chief Executive of WFD is designated by the Principal Accounting Officer as WFD‟s Accounting Officer with responsibilities for: a. b. c. d.

ensuring that the requirements of Government Accounting are met as defined in the Treasury guidance publication “Managing Public Money”; compliance with the terms of the Management Statement with the Foreign and Commonwealth Office; ensuring that all accounts of WFD are properly maintained and presented; and ensuring that all resources are used economically, efficiently and effectively.

The Governors are responsible for the maintenance and integrity of the corporate and financial information on the Westminster Foundation for Democracy website. Legislation in the UK governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

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The Westminster Foundation for Democracy Limited STRATEGIC REPORT

This Strategic Report has been prepared following guidance issued by the Financial Reporting Council. 1.

Nature, Objectives and Strategies of the Foundation

The Westminster Foundation for Democracy Ltd (WFD) is a non-departmental public body sponsored by the Foreign and Commonwealth Office (FCO). It is a private company limited by guarantee with no share capital. Since its establishment in 1992, WFD‟s primary aim has been to assist, support and encourage the peaceable establishment and development of pluralistic democratic practice and political institutions. WFD implements programmes to (i) strengthen political parties, (ii) support parliaments and (iii) build knowledge about democracy-support. The British Government provides the vast majority of WFD‟s funding through a combination of central grants from the Foreign and Commonwealth Office and the Department for International Development plus grants or contracts from country-specific or thematic programmes. WFD also secures funding from other donors. Highlights of 2015-16 WFD‟s new five-year strategic framework was launched in February 2015. While maintaining the overall mission of supporting inclusive and effective governance, the strategy described the increasingly complex environment for democracy-strengthening work and the need for WFD to evolve in order to have an impact on the democratic culture in our partner countries. The strategy maintained WFD‟s long-standing political party and parliamentary strengthening programmes, consolidated the pilot Integrated programmes into a full programme combining parliamentary and political party work, and established a new Research and Policy programme to provide stronger evidence about how best to support democracy-strengthening. In response to the new strategy, the FCO and DFID agreed a further round of funding for WFD for the period April 2015 – March 20181, with the DFID contribution increasing compared to the previous grant period. In parallel, WFD continued to secure additional funding from other FCO and DFID programmes, as well as from other donors, including the EU, Germany and The Netherlands. Following the May 2015 UK General Election, preparations were made to adjust the allocations to and management of political party programme resources to reflect the new composition of the Westminster parliament. The adjustments took effect at the beginning of the 2016/17 financial year. Three of the political Governor positions on the Board changed; and one new independent Governor was appointed to fill a vacancy. As a result of increased funding, WFD established nine new offices for managing either parliamentary or integrated programmes, with the total number of country parliamentary programmes increasing from 12 to 232. A DFID-funded final evaluation of the 2010-2015 WFD programme found that WFD had “improved the means by which it has delivered its assistance to its partners and beneficiaries”3. An independent review of WFD‟s implementation of the recommendations of the Government‟s Triennial Review4 assessed achievements in all four of the broad reform areas - strategic direction and alignment with HMG priorities, integration between parliamentary and political party programmes, the role of the Board, and programme delivery - as strong or satisfactory. 1

Although this was a joint agreement, the FCO funding continues to be on an annual basis while the DFID grant is for three years. 2 Two of the country programmes operated without a country office. 3 Examples in the final evaluation included: New legislation has been adopted in Morocco and Bosnia-Herzegovina as a result, at least in part, of the interventions of WFD. Space has been created for citizens to participate in the budgeting process by the Constitution and legislation is being utilised and enforced at the local level in Kenya with budgets having been adjusted to reflect local concerns and interests. A government coalition has been formed in Bosnia-Herzegovina more quickly, resulting in less political dysfunction, as a result of the efforts of WFD. The Botswana political system is the most competitive it has ever been through the support provided to political parties. 4 Starting from 2011, Cabinet Office announced that all non-departmental public bodies (NDPBs) would have to undergo a substantive review at least once every 3 years

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Progress on implementation of the strategy WFD's 2015-2020 strategy is framed around three objectives: A. To support developing and transition countries in establishing or strengthening inclusive and effective democratic governance for their citizens by delivering political party, parliamentary and integrated (parties in parliament) programmes. This objective covers the majority of WFD‟s work and expenditure. All programmes contribute to one or more of four overarching outcomes, namely, better policy-making, greater accountability, better representation, and greater citizen-engagement. The focus was largely on establishment of new programmes at the beginning of the new funding cycle. The fact that the May 2015 UK General Election came near the start of the financial year meant that there was an inevitable delay to some of the start-up activity. However, by the end of the year, 30 Political Party programmes, 17 Parliamentary programmes and 4 Integrated programmes were underway. Some of the programmes were continuing existing programmes from the previous funding cycle. The new strategy fed into the strategic approach of each of the main programmes. The political party programmes were designed to enable WFD to support competitive political parties that would represent and engage citizens effectively and inclusively while presenting policy-based platforms, all in ways that would strengthen multi-party democracy in their countries. Most of the parliamentary programmes responded to requests to support efforts to strengthen oversight and accountability, for example in Morocco and Tunisia we helped to establish the first Committees in their region focused on scrutiny of public expenditure. For both political party and parliamentary programmes, work to increase engagement of women was a significant theme, including through a network in Africa focused on increasing the skills of potential women candidates for political office. In Ghana, the new Integrated programme began work to strengthen the democratic culture within parliament by supporting Committees as well as working directly with political parties on their behaviours within the Committees. B. To contribute to public knowledge about effective democracy strengthening, including democracy assistance for parliaments and political parties, in developing and transition countries. This objective covers WFD‟s Research and Policy programme, which is a new element in WFD‟s strategy. The core of the programme is a new research partnership that was signed with the Department of Politics and International Relations at the University of Oxford. The aim is to provide publicly available analysis of the lessons from WFD‟s programmes in order to contribute to evidence about what works best in supporting democracy-building. The first result of the partnership – a paper on the lessons from WFD‟s parliamentary programme - was presented at a conference in March 2016. A further collaboration with the Faculty of Law at Oxford on parliaments and human rights has yielded a new assessment tool to review the effectiveness of a parliament‟s work on human rights that has been applied in six countries, most notably improving the effectiveness of our work in Georgia. This will be linked with several of our new programmes funded through the FCO‟s Magna Carta Fund for Democracy and Human Rights5, bolstering our capacity to analyse and evaluate these interventions. An additional research programme on the Cost of Politics was also launched, with initial papers to be presented at an event in July 2016. WFD also established a partnership with opendemocracy.org that aimed to share further lessons and debate priorities on democracy-strengthening. C. To improve the sustainability, public accountability and value for money of WFD’s programmes through strengthening its structures, skills, and systems. As part of WFD‟s response to the Triennial Review, we initiated a significant amount of work to modernise our programme management processes and our related systems. WFD‟s draft programme manual was launched in November 2015 and is due for completion shortly. In parallel, we introduced new IT systems to improve connectivity and make it easier to share information within the organisation. In London, we updated our offices to allow more flexible working and increase the meeting and desk space within the existing premises. The WFD

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Launched in January 2016 the Magna Carta Fund is the FCO‟s dedicated strategic fund supporting global human rights and democracy work

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website was re-launched and a new Transparency Policy was introduced. The Board also adopted a new Value For Money Policy that draws on best practice from DFID and related organisations. The first external Annual Review of WFD‟s new programmes reported good progress in achieving our objectives. Elections support WFD also re-engaged in the field of election support this year. This was part of WFD‟s original mandate but work in this area had stopped when a separate UK organisation focused on elections support was established. However, their closure last year left a vacuum in UK capacity in this field and WFD subsequently secured two contracts with the British Government for the recruitment of UK observers for EU and OSCE election observation missions. WFD also manages training courses for potential observers that give them the skills they need to scrutinize the entire process – including the legal framework, the media environment, campaign finance, procedures on election day, and the complaints and appeals process. There is scope to expand WFD‟s work on elections in the future, including into capacity-building for election management. 2.

Current and Future Development and Performance

Programmes by region Africa WFD began a major reshaping of its Africa programmes during 2015-16. Central and East Africa In the Democratic Republic of Congo, WFD‟s five-year programme of support to the regional assembly of Province Orientale – which had built the skills of parliamentarians, parliamentary staff and civil society organisations and strengthened links with the Network of Congolese Parliamentary Staff (RCPP) - came to an end, as planned in the previous year. WFD‟s programme with the East Africa Legislative Assembly (EALA) also ended. WFD has supported EALA‟s ability to represent the citizens in one of the most effective regional economic communities in Africa. In its final year, the programme focused on EALA‟s engagement with the public including through social media and online platforms. The Speaker commended the „dedication and commitment‟ of WFD‟s work with the legislative assembly. In Kenya, WFD‟s three-year programme to help County Assemblies to develop a high level of expertise in financial development, resource management and oversight also ended. We worked with key bodies such as the Centre for Parliament Studies and Training and the Transitional Authority to the devolution process to equip the County Assemblies with the expertise they need. WFD is now developing a new programme to support the Kenyan Senate, which has the responsibility under the Constitution to ensure effective decentralisation. In Uganda, WFD continued to implement an EU-funded programme on Gender equality and women‟s empowerment in Uganda. This included convening the first ever Women‟s Parliament in Uganda that brought together over 200 women to consider how to support women‟s political empowerment. This programme will end in December 2016 and WFD is developing a new programme in the country. West Africa WFD established a new Integrated programme in Ghana in late 2015, bringing together work inside the parliament with support to the main political parties. We are focusing on improving the quality of policy analysis that MPs receive from parliamentary staff by providing training for the Parliament‟s dedicated research, library and ICT departments. WFD will also offer assistance to the Parliament‟s communications team to conduct effective outreach work to the public. WFD began work to establish a new programme in Sierra Leone in late 2015, working in close collaboration with the Commonwealth Parliamentary Association UK branch. The programme will aim to support the parliament to play a strong role in representing all citizens of Sierra Leone, addressing policy challenges, including strengthening health care and securing sustained economic growth, and ensuring oversight and accountability of the Government of Sierra Leone as it implements the Ebola Recovery Plan. WFD is also reviewing the scope for supporting political party development that would promote stable, responsible and policy-focused political competition during and following the 2017 Presidential 4

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elections. In Nigeria, the Conservative Party worked with the former ruling party following the elections in March 2015 to learn lessons from their first electoral failure. In parallel, WFD is starting implementation of a programme in the National Assembly and in some State Assemblies to help civil society groups to advocate for policy change. Southern Africa In Zambia, the Scottish National Party programme continued working with the Forum for Democracy and Development, helping strengthen their engagement with their members and improve their policy development. In Mozambique, WFD began work to establish a new programme in late 2015 to encourage a greater dialogue between citizens, CSOs and parliament. Subject to further consultation, the programme will support reforms to the Parliamentary Study Centre, which WFD had set up in 2011, including by increasing the Parliament‟s research capacity through training a new generation of parliamentary research staff. The Labour Party continued their work with the Botswana Congress Party (BCP) to increase its membership and build on its success in having the highest number of female and youth candidates amongst all the parties at the general election. The Democratic Unionist Party continued to work with the African Christian Democrat Party (South Africa) to improve their core skills, including through the establishment of a dedicated Press and Communications Office within the party‟s national secretariat. Multi-country in Africa The Liberal Democrat Party continued to support the development of strong and inclusive liberal parties across Africa through the Africa Liberal Network, which includes members from across the continent that are both in Government and in opposition. The Labour Party‟s Youth Academy for Africa brought together young activists and future leaders from social democratic parties in Africa to consider ways of tackling key policy issues affecting their countries. Their Women’s Academy for Africa continued to support women from political parties across Africa by training its members with the aim of increasing the number of women in public and elected positions. The Green Party of England and Wales supported the East Africa Green Federation (EAGF) to plan the next stages of its programme, building on the Strategic Plan that was developed in 2015. Europe and Central Asia In Europe, WFD built on its long-standing presence in the Western Balkans, re-engaged in parts of Eastern Europe and maintained its programmes in Georgia and Kyrgyzstan. WFD‟s support for the Network of Parliamentary Committees (NPC) in the Western Balkans continued, bringing together representatives from Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia. The network enables sharing of best practice among 25 key parliamentary committees in the region. The Labour Party also worked with a network of social democratic parties to strengthen their policy-making skills, and to engage young people. In response to the demand for better financial and budgetary oversight in the Serbian parliament, WFD helped to establish a Parliamentary Budget Office (PBO) in November 2015 in the National Assembly of the Republic of Serbia. The Labour Party also worked to build the skills of two centre left parties in Serbia and the Liberal Democrat Party established the Liberal Democrat Party of Serbia as a platform for promoting LGBT rights. In Bosnia, WFD worked with a range of political parties and media outlets to increase the skills and visibility of women candidates. This was WFD‟s first Integrated programme which is preparing for the local elections in October 2016. The Conservative Party also continued to work with parties in both entities in Bosnia. In Macedonia, WFD began working with a range of Civil Society Organisations in partnership with the European Instrument for Democracy and Human Rights (EIDHR). The aim is to develop the ability of those organisations to advocate on behalf of citizens and therefore promote and defend human rights. Both the Labour and Conservative Parties worked with parties in Montenegro, supporting internal organisational skills as well as improving policy formulation. In Ukraine, WFD worked with the German development agency GIZ to support Ukrainian MPs by establishing a Financial and Economic Analysis Office in the Verkhovna Rada. The Labour Party also supported development of the New Social Democratic Platform to reach out to new members and address employment and women‟s rights policies. In Moldova, the Labour Party worked with the Democratic Party to strengthen the skills of young activists in the party. In Belarus, working with international partners, UK parties supported the ability of local groups to observe the Presidential elections in October 2015. WFD worked with CSOs in 5

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Georgia to encourage greater oversight of the Government‟s Human Rights Action Plan and with the parliamentary Committees to build their understanding of the role they play in dealing with policy and legislation originating from the EU Association Agreement, as well as increasing the committee's understanding of human rights issues and related international best practice. The Liberal Democrat Party supported the Republican Party of Georgia to improve their campaigning and communications skills. WFD began consultations and analysis to plan a programme of support to the parliament in Armenia. WFD‟s support for the Kyrgyzstan parliament continued with an induction programme following the elections in October 2015. We have also been exploring the possibility of a wider programme working with the political factions in the parliament. Asia Our programme in Asia began to expand with new programmes in Indonesia and Sri Lanka. A further programme is planned in Burma/Myanmar. WFD continued its work in Pakistan, supporting the Punjab Assembly to operate effectively within the provisions of Pakistan‟s decentralisation programme, and beginning cooperation with the Sindh Assembly. WFD also supported the British Council‟s „Improving Parliamentary Performance' programme which aimed to strengthen the capacity of the Pakistan Institute of Parliamentary Services, a federal-level institution. In Indonesia, WFD started work on a new programme to support the lower house of the Indonesian parliament to improve its capacity in financial scrutiny with the aim of rebuilding the trust of citizens in the transparency and accountability of the parliament. In Sri Lanka, WFD began a new programme working with the parliament and with the political parties to support the evolving responsibilities of the parliament in response to constitutional change. Middle East and North Africa (MENA) In Iraq, WFD continued to work with the Kurdish and National parliaments to help committees to develop clear strategies and good quality research and information. The aim is to increase their capacity to hold government to account, improve legislation and promote transparency and good governance. In Jordan, WFD continued to support the parliament by consolidating establishment of the parliament‟s research centre and increasing the use of evidence in the parliament‟s work. WFD also continued to support the Integrity Committee and the Women MPs' Caucus. In Tunisia, WFD‟s programme is strengthening the Parliament's legislative, oversight and representation functions. WFD provided training and mentoring to help MPs improve their skills in drafting legislation, and is strengthening the outreach work of MPs and their communications with citizens. WFD continued its work in Morocco with the House of Representatives, supporting greater transparency and scrutiny of public policies, as well a more supportive and enabling environment for women. WFD is also supporting the Legislative and Oversight Office and committee staff. WFD is also starting a new programme of work with the upper house in Morocco. WFD established a new programme in Lebanon to enhance and strengthen the effectiveness of the parliament in carrying out its core functions and tackling key policy issues. The programme is supporting parliamentary committees and aims to strengthen parliamentary staff services. The programme is also trying to increase young people‟s trust in parliament and participation in politics. WFD provides support to the Coalition of Women MPs from Arab Countries. WFD works with the coalition to press for reform on three levels: building the awareness of forms and consequences of Violence against Women (VAW); supporting the development of a regional framework to combat VAW: and supporting new legislation in four countries (Lebanon, Tunisia, Jordan and Iraq) Latin America and Caribbean The Conservative Party began a programme of support to the Caribbean Democrat Union (CDU), covering 10 Caribbean countries with the aim of strengthening democratic processes and the outreach capabilities of CDU and some non-CDU parties, as well as increasing youth engagement in the CDU. WFD began a programme of support to the Venezuela National Assembly, working with all parties represented in the Assembly to increase its capacity to play a responsible role in representing all Venezuelan citizens, addressing policy challenges, and ensuring oversight and accountability of the Government of Venezuela. In Paraguay, the Conservative Party provided support to develop the campaigning and organisational capacity, and internal democratic processes of the Partido Colorado (ANR-PC). The programme also aimed to strengthen the role of women and the youth within the ANR-PC. 6

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Research and Policy WFD‟s research and policy programme was started during this year. We began a research partnership with the Department of Politics and International Relations at Oxford University that enables us to learn lessons from WFD‟s political party and parliamentary strengthening programmes and make those available both internally and with the wider democracy-strengthening community. The initial work of the partnership was presented in March 2016 and will be followed by further research papers during 2016-17. WFD will be expanding its research and policy work to develop some further lessons to apply to our programmes, for example in areas such as women‟s political empowerment, decentralisation, tolerance and the link between the cost of politics and corruption. Priorities for 2016/17 WFD has three main priorities for the year ahead. First, following the significant start up activities in 2015/16, the majority of our programmes now need to reach the stage of full implementation. In particular, there was extensive recruitment and consultation for the parliamentary and integrated programmes which should allow activities to be planned and implemented. The significant number of research programmes that are being launched during 2016/17 should provide important evidence for future programmes. Second, WFD will seek to secure significant additional donor funding beyond its core grant in order to increase our impact. This will require us to improve our business development skills and capacity. Our target is to double the level of additional funding compared to 2015/16, i.e. to secure about £2 million of additional funding. However, we will operate cautiously so that we do not incur obligations that pose financial risk to the organisation. Third, WFD will complete its programme of modernisation of its systems to consolidate improvement in our programme and information management, and our value for money. This will require continued investment in equipment and training. This is also an opportunity to make further progress in strengthening WFD‟s internal communications and our effectiveness. 3.

Principal risks and uncertainties

As the nature of working on political governance abroad is complex and often delicate, the Board acknowledges that risk is a characteristic of WFD‟s work. WFD was set up as a non-departmental public body, at arm‟s length from Government, precisely so that it could undertake projects carrying a higher degree of political risk than would be undertaken by Government. There will also often be serious security risks in the countries in which WFD operates. WFD has always sought to support innovative projects for which direct UK Government support would not be available, and which carry a higher risk of failure than projects with less uncertainty. Risk management is fundamental to WFD in order to meet its programme and organisational goals and WFD has in place a risk management framework to identify and to manage risks and this is reported in more detail on pages 16 and 17. The Board has identified its principal risks and uncertainties that could have a material impact on WFD in carrying out its work and has grouped them under four headings: Programmes, Policy, Capability, and crosscutting these, Governance. Programmes – this group of risks includes the risk that WFD suffers from the perception of political interference or of operating outside national laws, and the lack of public confidence if poor management leads to individual safety risk to staff, trainers, and delegates during its programmes. WFD takes care when planning programmes to identify potential risks whether based on relevant context analysis or via pragmatic security and logistic assessments. It is in the nature of WFD‟s work that political risks will always be prevalent and therefore building trust between individuals and groups is seen as a key way to mitigate them. WFD also needs to be able to demonstrate that it has a strong understanding of the policy context for democracy assistance, particularly assistance related to parliaments and political parties, in order to maintain the confidence of partners and funders. 8

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Policy – this group captures the risks that WFD can lose support for its theory of change or its programme model if WFD fails to maintain impact and/or quality in its programmes and research publications. During the year, WFD has commenced a number of initiatives intended to strengthen WFD‟s reputation among political and professional groups and institutions, including launch of a Community of Practice, research events, a research partnership with Oxford University, and more refinement of WFD‟s internal guidance and procedures. Capability – these relate to the need to maintain appropriate staff capacity and maintain effective systems, particularly IT and financial controls. WFD needs to be able to manage its staff, skill-sets, and funds in a way that ensures value for money in its operations, and provides assurance of sound financial management of public funds. Governance – these principal risks are not specific to the above and are concerned with loss of support from key stakeholders, particularly core funders, or economic conditions that impact on funders‟ ability to maintain or grow support for WFD programmes. They include the risks of not addressing the recommendations from key external reviews, including lack of cohesion that undermines WFD‟s effectiveness or reputation. During the year, a number of new initiatives have commenced that are intended to mitigate these risks, including a more focussed communications strategy, higher level of political engagement, and implementation of external review recommendations. 4.

Resources

As at 31 March 2016, WFD employed 22 full-time equivalent staff in the UK (2015: 20), of whom 15 (2015: 12) are responsible for the design, management and delivery of country programmes and for managing local and UK partnerships. In countries where WFD is represented, WFD employs local staff that are engaged either on contract of services terms, or contract for services terms, and which are determined by the local circumstances. As at 31st March 2016, there were a total of 33 full-time equivalent appointments overseas (2015: 24). UK staff are currently organised into specialist regional teams covering Africa, Europe and Eurasia, Middle East and North Africa (MENA), Asia, and Latin America/Caribbean (LAC). At the start of the year a new UK staff structure was implemented including two Regional Director posts that allow for greater focus on strategy, policy, and business development issues, with delegation of programme management responsibilities to Senior Programme Managers. Policy skills are now provided by WFD‟s new parliamentary adviser. Inconsistencies in the way in which programme management responsibilities and accountability are reconciled are being addressed by adopting a model of Senior Responsible Officer, though more work on this initiative is still required. Overseas arrangements will continue to be assessed for their effectiveness and purpose but mainly follow the previous model of a Country Representative leading a country team supported by Programme Assistant/Financial Administrators. Increasingly, parliamentary and integrated programmes are managed or administered by local hubs, as one way of improving efficiency or effectiveness. In the year WFD operated programme field offices in more countries than ever before, including some for the first time, plus conducted assessments and context analyses in preparation for several more new countries for 2016-17. This network of local offices has proved very successful in WFD being able to establish strong relationships with local partners and to respond quickly to new needs and opportunities. The relationships with UK political parties and the access to their expertise and trainers, and the ability to draw on other specialist expertise in Parliament and the devolved UK Assemblies, provides WFD with an extensive network of skills and knowledge as well as a unique selling point. As well as WFD‟s sponsor department FCO, DFID remains an important strategic partner and funder for WFD programmes and will continue to fund WFD until 2018 under the terms of its three-year (2015-2018) Accountable Grant of up to £9 million. This is in addition to the FCO‟s core grant-in-aid (GIA) which for 201516 was £3.5 million, and for 2016-17 has been confirmed as £4.5 million. In addition to its grant funding by the FCO and DFID, WFD secured other funding through the Arab Partnership Fund of £339,000 for programmes during 2015-16 in Morocco (£307,000) and Algeria (£32,000) (last year combined was £203,000). During the year 2015-16, WFD received £143,000 from the EU for parliamentary strengthening programmes in Pakistan (sub-contracted from British Council), in Uganda, and for elections observation work in Macedonia. 9

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5.

Financial Position

WFD receives an annual core grant-in-aid from the FCO out of monies voted by Parliament, to enable it to achieve agreed objectives. This core grant is supplemented by further specific contracts from the FCO and from DFID. WFD has bid for and received European Union funds and it may seek funds from other public sector funds and from the private sector. The conditions of the grant-in-aid require that it should be applied for according to need and be spent in the year to which it relates. Cash balances are to be minimised, commensurate with being sufficient to meet liabilities. WFD applies for grant-in-aid periodically, typically bi-monthly, based upon cash flow forecasts of project and non-project expenditure. WFD is not capital intensive and therefore grant-in-aid funding is used for project expenditure and WFD nonproject costs, low-level capital expenditure and changes in working capital. During the year 2015-16 the grant-in-aid was £3.5 million. In 2015-16 £2,091,140 (2014-15: £2,182,006) was awarded or spent from grant-in-aid on projects and programmes and WFD spent a further £2,919,265 on projects funded wholly or partly by additional income (2014-2015: £2,662,575). WFD fully spent its grant-inaid allocation to projects and programmes. There were no events during the year that adversely affected the financial position of WFD. It has been confirmed by the FCO that grant-in-aid for 2016-17 will be increased to the level of £4.5 million although this is one-off and for 2017-18 onwards is expected to be restored to the level of £3.5 million. DFID funded WFD with £2.5 million as the first year of its 3-year Accountable Grant 20152018 under which DFID has committed to spend up to £9 million with WFD between 2015 and 2018. 5.1 Capital Structure WFD is a company limited by guarantee and therefore does not have a share capital. 5.2 Cash Flow and Liquidity During the year WFD had an increase of £296,640 (2014-15: increase £110,983) in cash and cash equivalents, resulting in net liquid funds at 31 March 2016 of £955,163 (2014-15 £658,523). Key factors contributing to the increase were the increase of deferred income at year end less the increase of accrued income (combined £14,000), the sharp increase in trade receivables and prepayments (combined £-133,000), the increase in trade payables and accruals (combined £372,000), and increased provisions (£33,000). Other working capital changes had the net effect of increasing cash by £10,000. The Statement of Cash Flows provides further analysis. 6.

Relationships

WFD has significant relationships with the UK political parties, FCO, DFID, British Council, in-country partners and institutions, and grantees and institutions of the countries in which it operates. WFD has on-going contractual arrangements with and on behalf of the European Union, for work until 2016. 7.

Details of Particular Matters

7.1 Employees WFD‟s policy is to be an equal opportunities employer and its aim is that there will be no discrimination of any kind against any person on the grounds of colour, race, nationality, creed, religion or belief, sexual orientation, marital status, gender, disability, age or any other personal characteristics. We observe the Equality Act 2010 and make reasonable adjustments for people with disabilities. If a member of staff becomes disabled while working with us, we will do everything possible to ensure they continue working with us.

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WFD is committed to the policy on equal opportunities set out in the statement above and is required to comply with the Civil Service Commissioners‟ Recruitment Code. This ensures that there is no unlawful direct or indirect discrimination and enables the development of good employment practices. The application process for advertised vacancies within WFD is designed to ensure confidentiality of candidates at the short-listing stage, so ensuring that applications from disabled candidates are given full and fair consideration. WFD‟s management and staff policies are maintained, reviewed, and updated on a regular basis and made available to all staff. They are also subject to internal audit to ensure compliance with legislation. Recruitment and interview procedures are structured to avoid discrimination. The breakdown of each sex as at the end of March 2016 was as follows: Female Male Governors Employees in senior executive positions UK staff Overseas staff

3 12 18

7 2 8 15

WFD has a grievance procedure to be used by staff if they believe they may have been discriminated against. There were no grievances raised by staff during the last financial year 7.2 Essential Contractual Arrangements Political parties in receipt of an allocation of grant-in-aid entered into contractual agreements with WFD for the financial year 2015-16. The contracts specify the amount of, and the conditions attached to, the allocated grantin-aid. New contracts in respect of the financial year 2016-17 have been issued. On behalf of the Board

Anthony Smith Chief Executive and Accounting Officer 4 July 2016

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The Westminster Foundation for Democracy Limited GOVERNORS‟ REPORT The Governors have pleasure in submitting their annual report together with the audited financial statements of the Westminster Foundation for Democracy for the year ended 31 March 2016. The financial statements have been prepared in a form directed by the Secretary of State for Foreign and Commonwealth Affairs with the consent of HM Treasury. Background Information The Westminster Foundation for Democracy Limited (WFD) is domiciled in the United Kingdom and its registered office is 8th Floor Artillery House, 11-19 Artillery Row, London SW1P 1RT. WFD receives grant-in-aid from the Foreign and Commonwealth Office provided out of monies voted by Parliament to enable it to achieve agreed objectives. WFD also receives additional specific grants from the Foreign and Commonwealth Office, from the Department for International Development, and from the European Union, and may receive private sector funds in addition to these core funds. WFD's priorities and objectives are established by its Board of Governors and are kept under continuous review. The Secretary of State for Foreign and Commonwealth Affairs and the Treasury Solicitor are the two named subscribers to the Company's Memorandum of Association. The Secretary of State has formal powers of appointment to WFD's Board of Governors but the Board operates independently and at arm's length from Government. Results The results for the year are summarised on page 21 and takes into account the requirement under the Government Financial Reporting Manual that grant-in-aid is to be treated as financing and is taken directly to the core funds reserve, as opposed to being recognised as income. Accordingly the deficit for the year, before accounting for grant-in-aid is £3,481,356 (2014-15: £3,497,572). This deficit is set-off with the grant-in-aid in the core funds reserve, which leaves total funds (core and corporate) of £170,832 to be carried forward at the end of the year (2014-15: £152,188). Board Of Governors Governors who served on the Board during the year and who were Directors under the Companies Act 2006 were: Appointed in the year Rushanara Ali MP Henry Bellingham MP Ken Caldwell Rt Hon Jeffrey Donaldson MP Rt Hon Dame Margaret Hodge MP Bronwen Manby Ann McKechin MP John Osmond Andrew Rosindell MP Rt Hon Alex Salmond MP Rt Hon Andrew Stunell MP Peter Wishart MP Simon Walker

Resignation date

Appointment Ends 30-Jan-19 03-Sep-16 17-Jul-16 6-Jul-18 25-Aug-18 20-Feb-17

6-Jul-15 25-Aug-15 11-Jun-15

21-Feb-17 17-Aug-16 21-Jul-18

21-Jul-15 21-Jul-15 31-May-15 7-Dec-15

7-Dec-18

No Board member holds company directorships or has other significant interests which may conflict with their responsibilities, or has undertaken any material transactions with related parties. The Register of Interests is 12

The Westminster Foundation for Democracy Limited GOVERNORS‟ REPORT available to the public at WFD's registered office upon provision of 24 hours‟ notice.

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The Westminster Foundation for Democracy Limited GOVERNORS‟ REPORT Audit and Risk Assurance Committee WFD‟s Audit and Risk Assurance Committee ensures that WFD adheres to the highest standards of propriety in the use and stewardship of public funds and encourages proper accountability for the use of those funds. The Committee also promotes the development of internal control systems. During the year ending 31 March 2016 membership of WFD‟s Audit and Risk Assurance Committee comprised; John Osmond Chair Bronwen Manby Rt Hon Dame Margaret Hodge MP Appointed 16 September 2015 Rt Hon Andrew Stunell MP Until 21 July 2015 Employee Information Each member of staff has their performance appraised annually against agreed objectives An integral part of this review requires the identification of learning and development needs and the development of a training programme, by their manager, to address these needs. Staff will be helped to pursue studies which will support their career development and benefit the Foundation by improving performance. Staff meetings held during 2015-16 provided the opportunity for consultation by providing information to employees and encouraging views to be expressed. A whistle-blowing policy is in place and staff are reminded of this and encouraged to use it. Awareness of Relevant Audit Information So far as each of the Governors is aware, there is no relevant audit information that has not been disclosed to the company‟s auditors and each of the directors believes that all steps have been taken that ought to have been taken to make them aware of any relevant audit information and to establish that the company‟s auditors have been made aware of that information. Creditors WFD adheres to the Government-wide standard on bill-paying which is to settle all valid bills within 30 days. In 2015-16, the average age of invoices paid was 10.98 calendar days (2014-15 8.76 days). All undisputed invoices were paid within the agreed credit terms. The proportion of the aggregate amount owed to trade creditors at the year-end compared with the aggregate amount invoiced by suppliers during the year was equivalent to 39.2 days (2015 18.7 days). Events after the reporting period date The result of the referendum held on 23 June was in favour of the UK leaving the European Union. This is a non-adjusting event. A reasonable estimate of the financial effect of this event cannot be made. Auditor The Comptroller & Auditor General is the statutory auditor for the accounts of WFD. Approved and authorised for issue and signed on behalf of the Board on 4 July 2016

Henry Bellingham

Chair

Anthony Smith

Chief Executive and Accounting Officer 14

The Westminster Foundation for Democracy Limited REMUNERATION REPORT The Terms and Conditions Sub-Committee of the Board is responsible for reviewing all aspects of remuneration and employment terms and conditions of staff. Their recommendations are submitted to the Board for approval. The committee is chaired by a governor appointed by the Board and during the year ending 31 March 2016 the following Governors were members of the Committee: Rt Hon Alex Salmond MP, Chair Andrew Rosindell MP As a public funded body, WFD adopts the guidelines followed by its sponsor body, the FCO. Following on from the Autumn Statement 2011 announcement that public sector pay awards would average at 1 per cent for the two years following the pay freeze (2013-14 and 2014-15), in its Budget 2013 the government announced that public sector pay awards will be limited to an average of up to 1 per cent in 2015-16. The remuneration of the Chief Executive and the Finance Director is reviewed annually and is determined by reference to the recommendations of the Senior Salaries Review Body, based on the annual performance appraisal conducted by the Chair of the Board. Performance objectives are set for the succeeding year and these are reviewed on an iterative basis through the year, to assess performance. A performance related bonus can be paid dependent on performance in line with civil service guidelines. WFD entered into a Service Agreement with Anthony Smith, Chief Executive, on 18 August 2014 and this remained in effect throughout the year to 31 March 2016. During the year, in line with the pay policy there was an increase in base pay by 1 percent and bonuses of £1,600 and £1,120 were paid to Anthony Smith and Paul Naismith respectively based on performance in the year to 31 March 2015. The Chair‟s recommendations were reviewed by the Terms and Conditions Committee and the awards approved by the Board. The following remuneration information has been subject to audit. During the year the single total figure of remuneration made to senior managers was as follows: Single total figure of remuneration Salary (£‟000)

Bonus payments (£‟000)

Benefits in kind (to nearest £100)

Pension benefits6 (to nearest £1,000)

Total (£‟000)

2015-16

2014-15

2015-16

2014-15

2015-16

2014-15

2015-16

2014-15

2015-16

0-5

0-5

-

-

35,000

22,000

Paul Naismith

95100 70-75

60-657

201415

80-858

0-5

5-10

-

-

29,000

31,000

All Governors

-

-

-

-

-

-

-

-

130135 100105 -

80854 120125 -

Anthony Smith

Reporting bodies are required to disclose the relationship between the remuneration of the highest-paid employee in their organisation at the reporting period end date, and the median remuneration of the organisation‟s workforce. The mid-point of the banded remuneration of the highest-paid employee in WFD at the financial year end 2015-16 was £97,500 (2014-15, £97,500). This was 2.6 times (2014-15, 2.8) the UK median remuneration of the workforce, which was £37,400 (2014-15, £35,410). Total remuneration includes salary and non-consolidated performance-related pay but excludes severance payments. There were no benefitsin-kind paid in the year (2014-15, nil). It does not include employer pension contributions and the cash equivalent transfer value of pensions.

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The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) plus (the real increase in any lump sum) less (the contributions made by the individual). The real increases exclude increases due to inflation or any increase or decreases due to a transfer of pension rights. 7 The prior year figure is between 18 August 2014 and 31 March 2015. The full year equivalent was £95k-£100k 8 The prior year figure includes period as Acting Chief Executive between 1 April 2014 and 18 August 2014

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The Westminster Foundation for Democracy Limited REMUNERATION REPORT Governors are appointed by the Secretary of State for the Foreign and Commonwealth Office for a term of three years. Appointments can be renewed for a maximum of three consecutive terms (nine years). Governors are not remunerated and WFD does not pay allowances and benefits in kind to Governors, or to the Chief Executive, or any other members of staff. Details of the dates of appointments of new Governors and the dates that appointments end are shown in the Governor‟s Report. During the year no payments were made to third parties for services of a senior manager. Pension benefits at 31 March 2016: Accrued pension at pension age as at 31 March 2016 and related lump sum £000

Real change in pension and related lump sum at pension age

CETV at 31 March 2016

CETV at 31 March 20159

Real change in CETV

Employer contribution to partnership pension account

£000

£000

£000

£000

Nearest £100

Anthony Smith

35-40 plus lump sum of 105-110

0-2.5 plus lump sum of 5-7.5

793

705

33

-

Paul Naismith

15-20 plus lump sum of nil

0-2.5 plus lump sum of nil

240

199

16

-

CETV is the Cash Equivalent Transfer Value and is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. As the Principal Civil Service Pension Scheme (PCSPS) is a multi-employer fund, the CETV values will include accumulated accrued benefits from any previous employers that operate the PCSPS. Real change in CETV reflects the increase/(decrease) in CETV that is funded by WFD. It does not include the increase in accrued pension due to inflation or the contributions paid by the employee and uses common market valuation factors for the start and end of the period. Compensation for loss of office: During the year, compensation for loss of office was made to 3 staff members that left on early departure terms. Redundancy and other departure costs have been paid in accordance with the provisions of the Civil Service Compensation Scheme and they received compensation payments as follows: Compensation payments during 2015-16 (2014-15 £nil) Exit package cost band